Japan Stocks Advance on Resources; Shippers Jump on Ratings

By Masaki Kondo

June 10 (Bloomberg) -- Japanese stocks rose, led by resource producers as oil and metal prices jumped, outweighing a bigger-than-expected drop in the nation’s machinery orders.

Mitsubishi Corp., which gets more than half its profit from commodities, increased 4.5 percent as crude rose a second day and copper gained the most in a week. Japan Petroleum Exploration Co., the nation’s No. 2 oil explorer, jumped 5 percent. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. climbed at least 3.7 percent after analysts boosted their ratings.

“Capital spending is still low and the job market is harsh, but investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees about $7.7 billion. “The recovery in the commodity market and ample liquidity with low interest rates are spurring investor appetite for risk.”

The Nikkei 225 Stock Average added 141.51, or 1.5 percent, to 9,928.33 as of 12:38 p.m. in Tokyo, rebounding from yesterday’s 0.8 percent decline. The broader Topix index rose 14.93, or 1.6 percent, to 933.17, with more than four stocks advancing for each that slumped.

Companies on the Topix trade at 43.3 times their estimated net income for this fiscal year, the highest level among benchmark indexes in the world’s five biggest stock markets, according to Bloomberg data. The gauge has risen 6.9 percent this year through yesterday as central banks in Japan, the U.S. and Europe cut key interest rates and pumped money into the economy to curb the global credit crisis.

Machinery Orders

Japan’s machinery orders, which indicate capital investment in the next three to six months, fell 5.4 percent in April from the previous month, a government report released this morning showed. Economists had estimated a 0.6 percent drop from March.

Mitsubishi, the nation’s biggest trading company by value, surged 4.5 percent to 1,961 yen. Japan Petroleum leapt 5 percent to 5,640 yen, while metal producer Sumitomo Metal Mining Co. added 6.3 percent.

Dowa Holdings Co., Japan’s No. 2 zinc smelter, soared 7.1 percent, breaking a four-day losing streak. The Nikkei newspaper said its metal business may post a profit in the year to March 2010 as the company cuts costs, though Dowa is projecting a loss.

Crude rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement in seven months, and extended its gain today. A gauge of six metals jumped 3.8 percent in London. Copper surging 5 percent in New York, the most since June 1.

Shippers Advance

A gauge of maritime transport companies rebounded from a four-day retreat after Credit Suisse Group AG raised Japan’s three-biggest shippers to “outperform” from “neutral” on expectations earnings will bottom this year. Deutsche Bank AG also boosted ratings on Nippon Yusen and Mitsui O.S.K.

Nippon Yusen, Japan’s top shipping line by sales, rose 3.7 percent to 453 yen, while closest rival Mitsui O.S.K. added 5 percent to 688 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, jumped 5.9 percent to 447 yen, also benefiting from comments by President Hiroyuki Maekawa that the company may cut more costs.

Nikkei futures expiring in June added 1.6 percent to 9,940 in Osaka and gained 1.5 percent to 9,930 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.